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CUSTOMER FOCUSED

CONCEPTS IN SCM

MKIS & CRM

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WHAT IS MODERN SELLING?

Evolution of the selling concept: It is more integrated with Marketing

Management today

Focus on Relationship selling: To a collaborative/ partnership form of

selling

Give the customers exactly what they want

Relationship entails creating customer loyalty

This involves a trade-off: Separating the wheat from the chaff

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COMMON JARGON

CRM:Customer Relationship Management

CRM: Continuous Relationship Marketing (McKinsey)

eCRM: Electronic CRM

mCRM: Mobile CRM

ERM: Enterprise Relationship Management

PRM: Partner Relationship Management

SRM: Supplier Relationship Management

CEM: Customer Experience Management

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COMMON JARGON

SRM: Supplier Relationship Management

CFM: Customer Focussed Marketing (??)

RM: Relationship Marketing (Regis McKenna)

TERM: Technology Enabled Relationship Marketing (Gartner Group)

Interactive Marketing (John Deighton, HBS)

Database Marketing (Direct Marketers)

1 to 1 Marketing (Don Peppers & Martha Rogers)

Customer Intimacy (Fred Wieserma)

XRM: Extended Relationship Management4

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PERSPECTIVES OF CRM

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THE IT PERSPECTIVE

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Oracle

Data Warehouse

OLAP

I-Miner

Seagate Crystal Reports

RDBMS

Open architecture approach to Data

Thin clientSiebel CRM suite

Enterprise data analysis systems

Application Server

Users & Permissions

DATA MINING

Entities & Relations

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THE MATHS-BASED PESPECTIVE

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Regression

Standard Deviation

CHAID: Automatic Interaction Detector

Multivariate Analysis

Exploratory Data AnalysisANOVA

FactorAnalysis

Discriminant Analysis

Statistical Significance

ConfidenceClustering

Neural Networks

Modeling

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THE SALES MANAGERS PERS

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RFM

CustomerLifetime Value

Market Basket AnalysisLoyalty

Modeling

Campaign analysis

Program Scoring

Customer Satisfaction Index

Catchment Area analysis

Scenario analysis

Predictive Modeling

Time-of-day, Day-of-weekChannel design and effectiveness

Early Warning Systems ROI

Propensity Models

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THE MODERN SALES CONCEPT

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Old

Classical

Modern

Factory

TargetMarket

IndividualCustomer

CRM Profits through

Customer loyalty

Profits through customersatisfaction

IntegratedMarketing

Customerneeds

ProductsSelling andPromotion

Profits throughSales Volume

CustomerExperience

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SO WHAT IS CRM?

To recognize and treat each customer individually to optimize customer

experience by serving their unspoken needs

and make him buy the product

again & again.

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WHAT EXACTLY IS LOYALTY?

A psychological and emotional bond between the customer (or anyother stakeholder) and the corporate conducing to a long-term

relationship

Manifested through:

Repeating purchase

Purchasing premium products

Referring to friends Becoming an advocate

Wanting to give opinion and have it heard

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WHY IS LOYALTY IMPORTANT?

Retaining customers is much profitable than acquiring new customers

Reduction of 5% of defective customers may result in 80% increase in

profitability (Reichheld & Sasser, 1990)

60% to 80% of lost customers were satisfied (King, 1996)

90% of customers who love a company will repeat but only 30% ofcustomers who like the company will repeat (Opinion Research Corp.)

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ZERO DEFECTION

Ranging from Goods to Services selling

Extending from Inventories to Intellectual Capital

Scrap heap (Low value customers) to Lost Valuable customers

Zero-defect to Zero-defection

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WHY CRM?

For relationship building. Technological Progress

Continuous communication

Understanding

Get Personal

Interactivity

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Technology: Database, Internet & Mass Customization

Cherry Picking - 80:20s rule

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THE CRM PROCESS

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Learning about Customers

Knowledge Acquisition

Customer Differentiation

Customization of Marketing Mix

Product

Price

Place

Promotion

Interactions

Interactions

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CRM & MKIS

Traditional MKIS relies only on data collection, data warehousing,

data mining and information retrieval.

MKIS systems can give a large scale consolidation of customer

behavior, but is unsuitable for identifying individual customerneeds.

CRM goes beyond MKIS in collecting those key customer specific

data that is then used to serve individual customers

Eg. Right from salutation, needs, preferences along with time,

duration and complexity of sale and service

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IMPLICATIONS OF CRM

Modern day CRM has pan-management reach

Has a close interlink with technology- Innovation is key

CRM and innovation produce product and service innovations

CRM helps in attracting, maintaining and enhancing customerrelationships

Relationships are key to understanding customers- retainingcustomers helps in building performance

Customers have a big role is idea generation and productconceptualization

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AREAS OF CRM

Widespread reach in Management related fields.

Technology Management

Business Process Re-engineering

Organizational Learning

Relationship quality and organizational performance improvement

Balanced score card design

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CRM STANDPOINT FOR SALES

Does the CRM implementation enable the company to identify and focuson its key customers?

Does the use of multi-channels enhance customer relationships while

reducing the cost of transactions with low-profit yielding customers?

Does sales force automation enable the sales people to enhance share ofwallet with key customers?

Does the analysis of the data gathered through customer interactionsenable cross-selling and up-selling opportunities?

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NEXT CLASS:

DISTRIBUTION SYSTEMS

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